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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Domicile, Not Residency, Is The Central Question In Determining Citizenship For Diversity Jurisdiction Under CAFA, Says California District Court

Posted in Case Summaries

Beauford v. E.W.H. Group Inc., WL 1808468 (E.D. Cal. Jun. 24, 2009).

In this case, the California District Court remanded the action to state court ruling that in absence of diversity of citizenship, it lacked subject matter jurisdiction under CAFA. No surprise there!  No diversity, even minimal diversity; no federal court.

Denise Beauford sued E.W.H. Group, who operated a car dealership known as "Bakerfield Mitsubishi," in California state court asserting breach of sales contract claims on behalf of herself and all buyers of E.W.H. Group who had received similar sales contracts. 

According to the plaintiff, the plaintiff and the defendant entered into a sales contract regarding a 2005 Kia Amanti, and, as part of the sales contract, the defendant agreed to pay off the loan on the plaintiff’s trade in.  The plaintiff alleged, among other things, that the defendant did not pay off the trade in and misrepresented the true history of the Kia Amanti. All of the plaintiff’s causes of action were brought pursuant to California state law.

The plaintiff is a citizen of California and the defendant is incorporated in and has its principle place of business in California.

Asserting that two of the class members were from the state of Texas, E.W.H. Group removed the case to federal court under CAFA. Holding that E.W.H. Group failed to meet its burden to be able to “affirmatively allege” and provide “competent proof” of the actual citizenship of the relevant parties supporting minimal diversity, the Court remanded the action.

In doing so, the Court noted the Ninth Circuit’s opinion in Kanter v. Warner-Lambert Co. 265 F.3d 853, 857 (9th Cir.2001) (which predates CAFA) that the state citizenship of a natural person is determined by her state of domicile, not her state of residence, because a person’s domicile is her permanent home, where she resides with the intention to remain or to which she intends to return, and a person residing in a given state is not necessarily domiciled there, and thus is not necessarily a citizen of that state.

The Court found that E.W.H. Group’s conclusion that two class members were from Texas rested solely on the declaration by its custodian of record and class members’ Texas drivers licenses which implied they were Texas residents a year to a year and a half before the time in question. The Court observed that E.W.H. Group had not produced competent evidence establishing the permanent homes and intentions of the two class members at the time of removal. The Court, thus, concluded that allegations of residency were insufficient to support diversity jurisdiction, and an allegation of residency cannot be regarded as an allegation of citizenship for the purpose of diversity jurisdiction. 

As a result, E.W.H. Group had to drive its Mitsubishi back to state court.